April 29, 1998
Board of Directors
Citizens Savings Bank of Salisbury
000 Xxxxx Xxxxxx
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
Dear Directors:
This letter sets forth the agreement between Citizens Savings Bank of Salisbury
("Citizens" or "Association"), Salisbury, North Carolina, and Xxxxxxxx & Company
("F&C"), Hurst, Texas, under the terms of which Citizens has engaged F&C, in
connection with its conversion from mutual to stock form, to (1) determine the
pro forma market value of the shares of common stock to be issued and sold by
Citizens' holding company; and (2) assist Citizens in preparing a business plan
to be filed with the application for approval to convert to stock..
F&C agrees to deliver the written valuation and business plan to Citizens at the
above address on or before a mutually agreed upon date. Further, F&C agrees to
perform such other services as are necessary or required in connection with
comments from the applicable regulatory authorities relating to the business
plan and appraisal and the preparation of appraisal updates as requested by
Citizens or its counsel. It is understood that the services of F&C under this
agreement shall be limited as herein described.
F&C's fee for the business plan and initial appraisal valuation report and any
required updates shall be $24,000. In addition, Citizens shall reimburse F&C
for all out-of-pocket expenses, which will not exceed $5,000. Payment under
this agreement shall be made as follows:
1. Five thousand dollars ($5,000) upon execution of this engagement letter.
2. Nine thousand ($9,000) upon delivery of the business plan.
3. Ten thousand ($10,000) upon delivery of the completed appraisal report.
4. Out-of-pocket expenses are to be paid monthly.
If, during the course of Citizen's conversion, unforeseen events occur so as to
change materially the nature or the work content of the services described in
this contract, the terms of the contract shall be subject to renegotiation.
Such unforeseen events shall include, but not be limited to, major changes in
the conversion regulations, appraisal guidelines or processing procedures as
they relate to conversion appraisals, major changes in Citizen's management or
operating policies, execution of a merger agreement with another institution
prior to completion of conversion, and excessive delays or suspension of
processing of conversions by the regulatory authorities such that completion of
Citizen's conversion requires the preparation by F&C of a new appraisal report
or business plan, excluding appraisal updates during the course of the
engagement.
To induce F&C to provide the services described above, Citizens hereby agrees as
follows:
1. Citizens shall supply in a timely manner to F&C such information with
respect to its business and financial condition as F&C reasonably may request in
order to make the aforesaid valuation. Such information made available to F&C
shall include, but not be limited to, annual financial statements, periodic
regulatory filings, material agreements, debt instruments and corporate books
and records.
2. Citizens hereby represents and warrants, to the best of its knowledge, that
any information provided to F&C does not and will not, at any time relevant
hereto, contain any misstatement or untrue statement of a material fact or omit
any and all material facts required to be stated therein or necessary to make
the statements therein not false or misleading in light of the circumstances
under which they were made.
3. (a) Citizens shall indemnify and hold harmless F&C and any employees of F&C
who act for or on behalf of F&C in connection with the services called for under
this agreement, from and against any and all loss, cost, damage, claim,
liability or expense of any kind, including reasonable attorneys fees and other
expenses incurred in investigating, preparing to defend and defending any claim
or claims (specifically including, but not limited to, claims under federal and
state securities laws) arising out of any misstatement
or untrue statement of a material fact contained in the information supplied by
Citizens to F&C or by an omission to state a material fact in the information so
provided which is required to be stated therein in order to make the statement
therein not false or misleading.
(b) F&C shall not be entitled to indemnification pursuant to Paragraph 3(a)
above with regard to any claim arising where, with regard to the basis for such
claim, F&C had knowledge that a statement of a fact material to the evaluation
and contained in the information supplied by Citizens was untrue or had
knowledge that a material fact was omitted from the information so provided and
that such material fact was necessary in order to make the statement made to F&C
not false or misleading.
(c) F&C additionally shall not be entitled to indemnification pursuant to
Paragraph 3(a) above notwithstanding its lack of actual knowledge of an
intentional misstatement or omission of a material fact in the information
provided if F&C is determined to have been negligent or to have failed to
exercise due diligence in the preparation of its valuation.
Citizens and F&C are not affiliated, and neither Citizens nor F&C has an
economic interest in, or held in common with, the other and has not derived a
significant portion of its gross revenue, receipts or net income for any period
from transactions with the other.
In order for F&C to consider this proposal binding, please acknowledge your
consent to the foregoing by executing the enclosed copies of this letter and
returning one copy to us, together with a check payable to Xxxxxxxx & Company in
the amount of $5,000. The extra copy of this letter is for your conversion
counsel.
Yours very truly,
/s/ Xxxxxxx X. Xxxxxx
Xxxxxxx X. Xxxxxx
Principal
Agreed to ($5,000 check enclosed):
Citizens Savings Bank of Salisbury
Salisbury, North Carolina
By: /s/ Xxxxxx X. Xxxxxxx
